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Metric

EV/Revenue

Category

Valuation Metrics

Definition

EV/Revenue (also called EV/Sales) divides a company's enterprise value by its trailing twelve-month net revenue. Because enterprise value accounts for both debt and cash on the balance sheet, EV/Revenue is capital-structure-neutral in the same way EV/EBITDA and EV/EBIT are — it compares the total cost of acquiring the business (equity plus net debt) to the top-line revenue it generates, independent of how that business happens to be financed.

EV/Revenue is most useful when a company has no profit to anchor a P/E or EV/EBITDA multiple to — early-stage growth companies, cyclical businesses at a trough, or businesses undergoing a temporary margin compression. Because it uses revenue rather than any measure of profit, it says nothing on its own about profitability or the path to profitability; a low EV/Revenue multiple on a structurally unprofitable business is not necessarily cheap.

Formula

EV/Revenue = Enterprise Value / Total Revenue (TTM)

How GeminIQ calculates this metric

GeminIQ computes EV/Revenue by dividing enterprise value by trailing twelve-month net revenue, both derived directly from as-filed SEC data. Enterprise value is built from market capitalization plus total debt and minority interest, minus cash and cash equivalents — see the [Enterprise Value](/metrics/valuation-metrics/enterprise-value) page for the exact components.

FAQ

Q: How is EV/Revenue different from P/S (price-to-sales)?

A: Price-to-sales compares market capitalization — the equity value alone — to revenue, ignoring debt and cash entirely. EV/Revenue compares the total enterprise value — equity plus net debt — to revenue. Two companies with identical P/S ratios can have very different EV/Revenue multiples if one carries significant debt and the other holds a large net cash position, making EV/Revenue the more capital-structure-aware comparison of the two.

Q: What is a "good" EV/Revenue multiple?

A: There is no universal answer — it varies enormously by industry and growth rate. Software and other high-margin, high-growth businesses regularly trade at high-single-digit or double-digit multiples, while low-margin businesses like retailers or distributors often trade below 1x. EV/Revenue is best used to compare similar companies within the same industry, or the same company against its own historical range, rather than as an absolute threshold.

Q: Why might EV/Revenue differ between platforms?

A: The most common source of variation is how enterprise value is constructed — specifically, what counts as debt (operating leases, minority interest, preferred stock) and how cash is treated. GeminIQ builds enterprise value from as-filed balance sheet components rather than a normalized template, so the individual inputs are visible and traceable to the original filing.

Now put it to work. Screen every US public company by EV/Revenue.

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